Top Indian Banks End FY25 With Stable Margins, Steady Profitability
Here are five key takeaways from the March quarter across HDFC Bank, Kotak Mahindra Bank, State Bank of India, ICICI Bank and Axis Bank.
India’s largest private and public sector banks closed the financial year ending March 2025 with stable margins, improved asset quality and steady profitability. While credit growth trends varied across lenders, most banks met key performance metrics, supported by low credit costs and continued deposit growth.
Here are five key takeaways from the March quarter across HDFC Bank, Kotak Mahindra Bank, State Bank of India, ICICI Bank and Axis Bank:
Margins Largely Stable Across Banks
Banks maintained or slightly improved their net interest margins (NIMs) on a sequential basis.
HDFC Bank reported a NIM of 3.46%, marginally higher than the previous quarter.
ICICI Bank and Kotak Mahindra Bank remained ahead, with NIMs of 4.41% and 4.97%, respectively.
SBI reported stable margins at around 3%, while Axis Bank saw its NIM rise to 3.97%.
Drivers included changes in deposit mix, higher CASA balances and benefits from cost of funds. Most banks expect margins to remain steady or slightly decline in FY26 due to rising deposit costs and changes in loan mix.
Asset Quality Improves Across Lenders
All five banks reported better asset quality during the quarter.
ICICI Bank, Kotak Mahindra Bank, Axis Bank and SBI recorded sequential declines in gross and net non-performing asset (GNPA and NNPA) ratios.
Credit costs remained low. ICICI and Axis reported significant declines in provisions.
Kotak continued to face delinquencies in the microfinance segment, but broader stress remained limited.
Banks reported low slippages in secured loan segments, while some maintained a cautious approach to unsecured retail portfolios.
Profit Growth Mixed; Returns Hold Steady
Profit growth varied across banks, but return ratios remained firm.
ICICI Bank posted a 7% quarter-on-quarter and 18% year-on-year rise in net profit, supported by higher net interest income and lower provisions.
Axis Bank reported a 13% sequential increase in profit despite slightly lower-than-expected net interest income.
SBI’s profit rose 10% from the previous quarter but declined year-on-year due to higher provisions.
HDFC Bank reported in-line earnings. Kotak Mahindra Bank’s profit rose sequentially but fell year-on-year.
Return on assets (RoA) for the quarter stood at:
ICICI Bank: 2.52%
Kotak Mahindra Bank: 2.19%
HDFC Bank: 1.92%
Axis Bank: 1.83%
SBI reiterated its FY26 RoA guidance of over 1%.
Deposit Growth Steady; Loan Growth Uneven
Most banks recorded steady growth in deposits.
Axis Bank reported a 7% quarter-on-quarter increase in deposits.
HDFC Bank and ICICI Bank posted 6% growth.
Loan growth was mixed
HDFC Bank and SBI saw around 4% sequential growth.
Kotak Mahindra Bank, ICICI Bank and Axis Bank reported slower growth in the range of 2% to 3%.
Some lenders flagged a more cautious stance on unsecured retail and microfinance loans going into FY26.
FY26 Guidance: Cautious Growth and Margin Pressure
Banks expect moderate loan growth and margin pressure in FY26.
SBI guided for 12–13% loan growth, with slower expansion in corporate lending.
Kotak Mahindra Bank expects loan growth at 1.5–2 times nominal GDP, with more focus on secured segments such as used vehicle finance and housing.
Most lenders indicated pressure on NIMs due to competition for deposits and slower CASA growth.
Outlook
Large banks entered FY26 with improved balance sheets, stable capital positions and steady profitability. However, loan growth trends remain uneven. Lenders are focusing on risk-adjusted returns, liability strategies and digital operations.
Return metrics and deposit franchise strength are likely to be key differentiators in the upcoming quarters.
